PDF Version: We’ve Got New Harmonized Crowdfunding Rules. But How Will Industry Respond?
Legislation Commented On: National Instrument 45-110, Start-Up Crowdfunding Registration and Prospectus Exemptions
The Canadian Securities Administrators (CSA) recently published, in final form, a harmonized national framework for securities crowdfunding (National Instrument (NI) 45-110), which, subject to ministerial approval, will come into force on September 21, 2021. This is a positive development and shows that provincial securities regulators can work together to make Canadian capital markets more efficient without a national regulator.
It is uncertain, however, how industry will respond – and this is no fault of the regulator. The harmonized framework balances dual policy pillars of investor protection and fair and efficient capital markets, and this should be applauded. But crowdfunding isn’t a panacea. It’s a tool that may fill a small gap in the capital raising ecosystem for start-ups. One might be skeptical about the net impact it will ultimately have on capital formation in Canada, and there are several good reasons why firms and investors may want to avoid it altogether.